Surrender ULIP to curb losses | Value Research The high charges under ULIPs lead to poor performance from such plans. Here's why you should surrender them
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Surrender ULIP to curb losses

The high charges under ULIPs lead to poor performance from such plans. Here's why you should surrender them

I have invested in Birla Sun Life Dream Plan. It is a ULIP. I started investing on November 2009 with an yearly premium of ₹1 lakh. The NAV was ₹29 at that time. The insurance cover is ₹14.5 lkah. Till now (after 5.5 years), I have paid ₹5,41,000, but the fund value is ₹5,93,000 (12150 unit * 49). I checked past statements and found that they have deducted a lot of money in the first three years. At this point, should I surrender this policy? Will it give me better return now onwards and in future? I have taken this policy for my pension. It's a 20-year investment. How much I may get after 20 years? My expectation is around ₹60 lakh. Please advice.
- Shib Kumar Thakur

The high charges under ULIPs lead to poor performance from such plans. If you look at the charges for this ULIP, there is a 5 percent Premium Allocation charge, 1.25 percent Fund Management charge, ₹25 per month Policy Administration charge as well as mortality charges which dent the returns generated by the fund. These are the charges for 6th policy year. You have already borne charges higher than these during first five policy years. The charges are still higher than mutual funds. We recommend that you surrender this plan.Surrender now to curb your losses . Do not repeat mistake by thinking to recover your money from this policy itself because it will never happen given heavy expense deduction. Buy term plan for life insurance.

Saving for retirement is very important to lead golden years independently with pride. You do not need any special retirement plan to save for the days. You have time by your side. Invest into Large & Mid Cap and Mid & Small Cap category for 17 to 18 years via monthly Systematic Investment Plan (SIP). You will not need your retirement corpus at one go. So, after completion of 18 years, start switching to debt gradually in a systematic manner via STP to freeze returns and start consuming your savings after you retire happily.

We are assuming you have factored in inflation while calculating retirement value of 60 lakh rupees. Assuming 8% inflation, your 60 lakh future value means that at present you spend ₹1,31000 per year or 11000 rupees monthly. If your current expense is more and you wish to enjoy same standard of living in future as well, you need to increase your budget. To accumulate 60 lakh, your monthly investment at given rate of returns has to be as follows.

Retirement Corpus (₹)60,00,000
Monthly investment (₹)at 12% p.a6065
at 15% p.a4007

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